2014 Santiago Blog: Pacific Alliance Deepens Integration, Announces Mercosur Meeting

On June 19 and 20, the presidents of Chile, Colombia, Mexico, and Peru met in Punta Mita, Mexico, for the Pacific Alliance’s ninth Summit. The Alliance, a pro-trade bloc made up of those four countries and 32 observers, promotes economic integration and joint growth of members with an emphasis on the Asia-Pacific region. Punta Mita also hosted the twelfth meeting of the Pacific Alliance Council of Ministers featuring the bloc’s ministers of foreign affairs and trade.

This is the first summit that Michelle Bachelet, Chile’s newly elected president, and Heraldo Muñoz, her minister of foreign affairs, attended. Alongside their counterparts, the two Chilean officials addressed a series of new steps the group is taking towards greater integration. And, as part of a new direction for the Alliance spurred on by Bachelet, Alliance members announced they would meet this year with representatives from Latin America’s other big trade bloc: Mercosur.

Ahead of the summit, Bachelet stated that while the Asia-Pacific region should remain a focus for the Alliance, her administration would promote changes. “Perhaps the main element of change is the intensification of ties with Latin America and the Caribbean, particularly with South America,” explained Muñoz. “Beyond legitimate differences, it is perfectly possible to achieve levels of convergence between Alliance countries and Mercosur, between the Atlantic and the Pacific. Not only is it possible: it is also necessary,” said Bachelet.

Addressing the apparent differences in position between the two blocs, Muñoz said: “Foreign policy will have no ideological bias. It will have a pragmatic bias.” To this end, a ministerial meeting between the two blocs was scheduled for late July in Cartagena, Colombia. The Chilean delegation also proposed to organize a seminar between the two blocs for academics, business groups, entrepreneurs, and senior officials in September. But any membership negotiations are “a long way off,” and other countries might not “necessarily want to join,” added Muñoz.

The Southern Common Market, or Mercosur, is made up of Argentina, Brazil, Paraguay, Uruguay, and Venezuela. The group stands in contrast to its Pacific neighbors for its more protectionist stance toward trade. Nonetheless, both Paraguay and Uruguay already hold Pacific Alliance observer status and expressed interest in closer relations.

Other initiatives on the table in Punta Mita included Mexico’s entry into the Latin American Integrated Market (MILA), the transnational exchange made up of the Bogota, Lima, and Santiago stock markets. Mexico’s bourse is by far the largest in the group, and its entry into MILA—scheduled for fourth quarter 2014—will raise MILA’s market capitalization to close to a trillion dollars, comparable to São Paulo’s Bovespa exchange. The merger will allow listed companies access to funding across all four markets, and will in turn allow investors much broader opportunities.

Additionally, the bloc’s foreign ministers signed an agreement for a working holiday scheme, allowing 18- to 30-year-old nationals from Alliance members to legally work on tourist visas in any of the three other countries for up to a year.

Read the full summit declaration outlining a complete list of outcomes from the Punta Mita meeting.